Making your business an S corporation has its advantages, but they come with corresponding obligations. Even if you're a one-person company, the advantages include protecting your personal assets from business liability. The obligations include following all the usual corporate formalities required by state law. That includes holding annual shareholder meetings.

Mandatory Meetings

Business law says corporate directors must hold annual meetings for the shareholders, with all discussion recorded in the minutes. Even if you're the entire board of directors and sole shareholder, you still have to hold an annual meeting. Failing to follow the rules could shred the corporate shield that protects your personal assets, making you vulnerable to business creditors. On the plus side, one-person meetings won't take long.

Costs of Meeting

To hold an official shareholder meeting, you need a place to meet. If you're the only one in attendance, your home office will be big enough. If you have a couple of dozen shareholders, you need somewhere larger. Renting space from a hotel or a conference center is fully deductible. If you pay to give the shareholders meals or entertainment, you can deduct 50 percent of those costs. This only applies to actual business meetings; shareholders getting together for a casual lunch doesn't qualify.

Risky Write-Offs

Deciding to hold your annual meeting in, say, Tahiti, is not going to go over well with the IRS. If you want to deduct the cost of meeting overseas, you need to show the auditor proof that you couldn't do it just as well in-country. You have a better chance writing off a meeting on a cruise ship, provided it doesn't dock at foreign ports. Even then, if you spend most of your time having fun, the IRS may throw out your deduction.

Keeping Records

Your tax deductions for the meeting will go down much smoother if you have the paperwork to back them up. That includes receipts for the meeting place, the food -- including tax and tips -- and anything else you spend. After you file your return, the IRS can audit you for three years, so that's the minimum time to hang on to receipts. If the IRS accuses you of underpaying by 25 percent, it can go back six years, so keeping records that long might be safer.

Resources

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.